California lawmakers passed a bill late Monday that would force major companies doing business in the state to disclose how much of the planet-heating carbon dioxide pollution they create. If the bill is signed into law, it would be the first of its kind in the country, and the Securities and Exchange Commission (SEC) has dragged its feet on similar federal bills.
The bill, SB253, would require the California Air Resources Board to develop rules by 2025 for companies with annual revenue of more than $1 billion. By 2026, these companies must publicly report greenhouse gas emissions from their operations and electricity use. On top of that, by 2027, the companies will also have to disclose how much pollution their supply chains and customers produce.
"California scores a huge victory on climate: Despite massive misleading propaganda from opponents..." California Senator and bill author Scott Wiener (D) posted on
Requiring companies to disclose the emissions produced by their supply chains and consumers' use of their products and services (called "Scope 3" emissions in industry parlance) has been the most opposed by industry. This prompts them to design less polluting products and encourages suppliers to reduce their own emissions. Scope 3 emissions typically account for the largest portion of a company's carbon footprint, so environmental advocates have been pushing to include them in the new rules.
The U.S. Securities and Exchange Commission proposed federal rules in 2022 that would require public companies to disclose similar information. The rules were expected to be finalized earlier this year but have been delayed after facing strong opposition from some companies, particularly those unwilling to share their Scope 3 emissions.
"We believe that the purpose of the Scope 3 disclosure requirements should not be to push public companies into the role of enforcing emission reduction targets that are beyond their control," BlackRock said in a June 2022 statement.
On the other hand, Apple just last week supported the California bill. "While measuring these emissions can be challenging, they are critical to a complete understanding of the company's climate impact," Michael Foulkes, Apple's director of state and local government affairs, wrote in a letter to Weiner last week.
After the bill successfully passes the state House of Representatives and the Senate, it will be handed over to Governor Gavin Newsom (Gavin Newsom) to sign into law. It's too early to know how California will enforce the law, which will depend on how the Air Resources Board develops regulations. California aims to achieve net-zero emissions across the state by 2045.